The end-of-year festive season fast approaching, a traditionally busier and riskier period for most businesses. To start the New Year without incurring unnecessary financial losses – often the result of being inadequately insured or failing to guard against heightened, but foreseeable risks during this time – it is important to understand your exposure and responsibility as an owner in this regard.
This is according to David Wedderburn, regional manager: corporate and business insurance division at Standard Bank Insurance Brokers, who says: “As a business owner, understanding your insurance cover and ensuring you have enough to mitigate all your possible risks can save you from potentially devastating losses. It should never be taken for granted that all losses your business could incur will be covered by your policy, since any foreseen risk that is not reasonably avoided may result in your claim being rejected.”
Wedderburn says carefully reviewing your policy to understand the risks for which you are covered is the first step to making sure that you are adequately protected during the holidays. “Not all ‘comprehensive’ insurance policies are the same, so it is vital to understand your policy’s terms and conditions not only to mitigate your risk, but also to be aware of any areas where cover may be insufficient.”
The end-of-year rush often results in businesses, large and small, having to increase their stock levels to meet increased demand.
“In this instance, adjustments to insured stock values and disclosure of any additional storage locations may need to be considered, since the sum for which it was initially insured may not be sufficient to cover the latest replacement value,” explains Wedderburn.
“Furthermore, most businesses haven’t considered the effect our fluctuating currency value has on their insured imported stock values,” he adds. “The recent weakening of the Rand against the US Dollar may result not only in the underinsurance of stock values, but also the underinsurance of electronic equipment, for example, and business interruption.”
Security, too, is of great concern over the festive period, since certain businesses may be left vacant for a few days or weeks while staff and owners take leave, increasing the risk of burglary. “While this is not an event that anyone can actually ‘foresee’, businesses must take the necessary security measures in accordance with their insurance requirements, both at the primary premises and at any additional ones,” says Wedderburn.
This includes having alarm systems tested by security service providers and ensuring that any maintenance on the security system is up to date.
“As in other aforementioned instances, a claim can be rejected in the event that these measures were not taken, even if the owner set the alarm before closure. It is also necessary to notify your insurer should your premises be unoccupied for more than 30 days, as this may affect the extent of your cover.”
Where money is collected or transported, Wedderburn advises business owners to adhere to all insurer requirements and warranties, vary banking times, routes and frequency.
“Theft is not the only risk a business faces, however, so it is important to check electric circuits and distribution boards for faults or hotspots to minimise the possibility of electrical fires.”
Wedderburn adds that fire prevention also includes servicing and maintaining fire extinguishers and hose reels in accordance with the manufacturer’s specifications and local bylaws.
In some parts of South Africa, December falls in the rainy season, so, to avoid flooding or water damage, business owners are advised to regularly clear all gutters and storm water drains. “Hail is also a problem, and we have seen several devastating hailstorms in recent years. Many insurance companies send out notifications to their clients preceding inclement weather, so make sure that your contact details on record are up to date – this can assist you to make provision for your fleet managers or drivers to receive notifications and so take preventative measures.”
Wedderburn adds: “A business is the livelihood of its employees, the owners and their families, and, sometimes, whole communities. If it is not adequately insured, or is completely uninsured, the collective financial consequences could be overwhelming. Access to various insurance policies is readily available, and it’s easy to speak to your financial advisor to select a policy that best suits your business’ needs and your finances.”